EXCLUSIVE: GERMAN BANKERS GIVE MERKEL ULTIMATUM: EITHER GREECE LEAVES THE EUROZONE, OR GERMANY MUST

With the help of Frankfurt and Parisian sources, US contacts, and German readers of this site, The Slog has been able to put together compelling evidence of Greece being perilously close to ejection from the eurozone. Doubts in Brussels and the IMF, preparations in Berlin – and clauses in the bailout agreement – all point to a German determination to either amputate Greece, or leave the eurozone itself.

If there is a single investor left anywhere on the planet who thinks the Troika bailout of Greece was undertaken with any genuine commitment, then after reading this post, there won’t be. Late yesterday evening (GMT Sunday) I spent some time debating facts, signs and issues with The Slog’s longstanding source, the Bankfurt Maulwurf. This followed a series of steers from Slog readers and other sources.

I turn first to the bailout agreement itself…where some startling things come to light. For starters, the EFSF (for that’s the principal in this document) is already in breach of it. Early up in the opening clauses, the stability fund undertakes to use funds from its existing budget to bail out Athens. As The Slog showed conclusively last week, this isn’t what happened: the ‘funds’ released were ECB non-cash bonds. The EFSF has yet to find a single investor anywhere to partake in the fund.

Now let’s review the get-out, rope-cutting clauses that the EFSF has awarded itself. Mainly under Clause 13 sub section 5, they include the EU being able to withdraw the whole deal at any time if:

* Any new Greek bond issuance replaces old bonds with a lower value/package offer.

* Any consituional and legal requirements in Greece have not been fufilled.

Says a Washington source in relation to the IMF stipulation:

“That was very much at the Fed’s insistence. This was always going to be Geithner’s game-ending card….instruct Lagarde to be unable to partake on the grounds of IMF articles about unlikelihood of getting repaid. The fact that he hasn’t played it suggests that the White House is ok with the Greek thing rolling over a little….but not for too long”.

That the Greeks themselves bought into these clauses further suggests they don’t really take the agreement seriously. (Venizelos is a key, named signatory, but has since resigned to campaign in the elections). But the nature of the individual get-outs is pretty stunning: how hard would it be to create a lack of funds or create a market disruption (they happen twice a day in the eurozone)?

And of course, the dog’s testicles in there remain the two I’ve been harping on from the start: fulfilment of the Accord requirements, and getting the Constitution changed to cede some sovereignty. Greek sources confirmed at the weekend that several of these are still loose ends that have been barely addressed. At any point in the coming five days, the EFSF could raise these and pull out.

The Slog’s Bankfurt mole takes things on from there:

“Wolfgang Schäuble hoped that some of these and other clauses would stir the Greeks sufficiently to cause a rupture in the negotiations,” he asserts, “There is no doubt about this, I know it to be true. You will see the clause in there insisting that hundreds of officials may swarm all over Athens at any time and must be given a free hand. The people around Schäuble were convinced this would start a riot, but the Greeks barely blinked.”

Asked further about Schäuble’s inflammatory statements at the time, he confided, “Of course, yes, this was part of the same game, naturally he wanted to create an incident. He raised tiny points at issue constantly, and then referred to Greece as a ‘black hole’ or something similar. His aim was to make life impossible for the other side.”

What Schäuble actually said was that Greece was a “bottomless pit”, which if anything was even worse. But the intent is clear: at that time, the German finance minister was very hawkish on the amputation strategy. Later still he had the effrontery to assert that Greece should put off its elections until clearer evidence of Greek recovery was apparent. This did cause a considerable stir, but didn’t break the deal.

The Bankfurt mole again:

“What you must remember, what I have always told you, is that Germany always has a back-up plan. For a time I feared Merkel would put the country at risk, but she has been reined in since then. So these days I am more relaxed. Chancellor Merkel has chosen Germany over Greece.”

German Slog readers have pointed me at recent legislation that supports the Maulwurf’s contention. For some time now, the BundesRepublik has had a ring-fenced ‘bad bank’ leper colony, with funds set aside for disasters, and very close Government overseeing of transactions there. Angela Merkel rushed the necessary legislation through the Bundestag immediately following the first Greek bailout. Recently, however – and few if any foreign observers have spotted it – the Bundestag has also quietly upped the entire banking sector’s recapitalisation funding. Also largely unnoticed, the Berlin Finance Ministry has been extremely heavy with private banks on the subject of balance sheet reduction and deleveraging.

Then two months ago, Berlin confirmed that Germany’s private bank ‘firewall’ fund (the so-called Soffin) had been reinstated – with a budget of $625 billion. Again, while few have commented on this, I am informed that the old legislation has been amended to allow private banks to sell any ClubMed sovereign bonds to Soffin….aka, Soffin will write off the losses on any and all debtor bonds should future events require that.

This might suggest a reason why Germany remains less than keen on boosting the EFSF/ESM firewall with German money: Germany is already adequately protected, thank you very much. On the other hand, it might also suggest a Chancellery preparing for a departure from the eurozone itself. The Maulwurf has an interesting take on this:

“I think one thing has been made clear to the Chancellor by my colleagues in the German banking community. Namely, that we cannot have a Fiskal Union or indeed a eurozone where there is both Germany and Greece. One of them has to go, and she must make her mind up about that”.

Sooner rather than later, I suspect, this issue of who is or isn’t destined for the Fiskal Union’s Promised Land is going to get bigger and bigger. But Angela Merkel is a woman who prefers to let events develop and then see how the landscape changes. The Max Keiser site has predicted for some time now that Germany would have to exit the euro at some point: if he’s right, then the new legislation about eurobond dumping into Soffin would suggest that such a move has indeed been seriously entertained. But The Slog’s favourite Paris source doesn’t see it as a realistic option:

“Well, as you know here there has been paranoia about Berlin’s real plans for some time now. But on the whole, I would say our impression is that both Merkel and Schäuble would see the abandonment of the euro as a very retrograde step. They would much rather chop off the Greek leg than leave the [EU] Central Bank with horrendous debts after a German departure. She [Merkel] wouldn’t be trying to prop up Sarkozy if she had no intention of remaining in the eurozone. On the other hand, if Hollande wins and the Greeks elect a leftist Government which reneges on the bailout, things could change very rapidly.”

Whether or not the planned March 23rd default is still in play as an option, Washington remains edgy about the chances of a messy Greek default. Says a source there:

“The feeling here is that Geithner’s urgency and willingness to dig Draghi out of a hole [the dollar/euro swap line] made a real impression on Brussels, and even more so on the Frankfurters [German bankers]. But we still don’t know what in Hell Berlin might do, or when. The White House is nervous about things going through to the [Greek] elections [scheduled for April 29th]. My view is that the President is right to be concerned, and I’m sure he’s getting heat from Wall Street on that. Geithner is pushing hard for the creation of a controlled situation….and soon. But right now it’s up in the air.”

As I posted at the weekend, if one can be bothered, the thing to do this week is watch out for any of the seven signs I listed in that piece. This isn’t about Greece’s relatively tiny GDP, it’s about uncontrolled contagion and Barack Obama’s re-election. Bizarrely, Greek Prime Minister Lucas Papademos is quoted by the London Financial Times this morning as believing that Greece is “more than halfway along the path to economic recovery – although the fiscal consolidation process will last longer,” he said. “Positive growth rates should be achieved within less than two years”.

But then again, he used to work for Goldman Sachs. Whatever the more likely timing of Greek demise, what does seem to have emerged in German financial politics is that the eurozone choice is a stark one: either Greece goes, or Germany does. With local elections about to kick off in the BundesRepublik, one could argue that the last thing Angela Merkel needs at the moment is to chuck Greece over the side. Or, you could argue that throwing Athens to the sharks is exactly what most German voters want to see.

Dear JHM. It is interesting to see prophecies from other countries apart from Greece about the forthcoming events. About this bright heavenly object and the three days of heavy war when a large percentage of the earth population dies, this is written in our prophecies as well. They also say that the object shows a very spiritual man in Konstantinople – Ioannis Vatatzis – who after the war becomes the leader of the Greek Nation and rules us in spirituality for the next 35-40 years.

I know that we should never enter the Eurozone bearing such an economy. But this doesn’t mean it is now easy to get out. A devaluation having such a deficit, production shortage and soviet structure, combined with fiscal and geopolitical isolation, would be uncontrollable disaster and and plain suicide.

As things are now, the only way is the hard way. I also observed that there is tremendous pressure against it. That’s how i discovered this blog, after noticing and investigating the various sabotages exposed here too. I also think that this top ranking blog, has itself become unconsciously part of this force, as it has attracted informers channeling the pro-amputation arguments. As Mr Ward himself writes commenting this very post, finding an informer as Maulwurf “[…]it’s sheer luck…and asking him questions that interest him. I still have no real idea why he talks to me….”. In the post reproducing the story about a mole inside Bank Of Greece reporting Greece printing euros, Caratacus observes, “If I have learnt one thing over the years it is this: if someone I do not know very well tells me something, the first thing I ask myself is, “Why am I being given this information?””. The first comment of the post by Confused.eu seems the natural answer: “If you were lokking for a reason not to hand over €130bn to Greece and letting her sail off into the sunset, this sort of thing would be just what you’d be looking for.”

So, as i see it, Papademos and Venizelos had quite an unexpectable success up to now, given the situation. That’s a pity because i believe Greek people will soon unappreciatively destroy it themselves. They will themselves provide the sabotage that was sought after. Greeks invented democracy, and they also invented democracy’s disease, demagogy. The demagogy of this day is founded on the throrough demoralisation by years of sovietisation, as has been implemented by the leaders of this currupt system for two generations now. For example, the above article author is treated like a traitor or nazi by most Greek media.

Chaos is emerging after these premature elections. And i insist, Turkey will not then stay put. The rest will be history that will probably affect many more than just Greece. Major rapid geopolitical overturns, beyond a local war might take place, which Greece cannot sustain anyway, possibly leading to larger conflicts.

So, here i am, now i bear bad news myself. Nevertheless, these news are not pro-amputation. On the contrary, my view insists that this is the very last chance for us, Greeks, and it is a survival war calling for prudence over rage, hard work over demagogy. The outcome is uncertain, the goal is very difficult, but we must fight it to prevent tragedy.

Please be so kind as to understand that these Prophecies are not my invention nor do i “believe” or “envisage” that all that ever will come true. These Prophecies span back from the early middle ages until our times, and an awful lot of people have done intense research for a very long time to check wether these are genuine, mere falsifications or simple copies and inventions. I do not claim anything in regard to those prophecies ever coming true, nor do i live in Angst – i am simply carefully considering and allowing unusual views on current events to enhance my understanding of events unfolding, which are in many cases rather astonishingly similar to many prophecies.

Regarding the prophecised destruction of Prague, as far as i know the oldest source describing the meteor impact on that city comes from “Der blinde Juengling von Prag/The blind boy of Prague” from the 14th century, there exists a copy of the original text of 1350 in a print from 1645 at the Bavarian State Library in Munich.

When it comes to the Russian “Invasion” it is simply what the prophecies tell, and from very early times on, in the oldest examples you’ll find descriptions which are clearly a reference to the Mongols, nearly all younger prophecies date from before WWII, before there was a cold war.

Think about it that way: If Germany in a crisis situation were to suddenly leave the €uro to prevent herself from being financially ruined or broken apart by her obligations and would then get all the blame, as usual, for the posible catastrophic enomic results incl. a breakdown of civil order in other €uro-countries and would then get into real trouble with neighbouring countries, and say, some NATO countries would then try to get Germany on track again by a little help of force, which they *could* do by interpreting the ‚enemy State‘ clauses from Articles 53, 77 and 107 of the Charta of the UN in their favour and then Russia *could* come to intervene … so, would such a scenario be thinkable or not? Would anyone telling in 1980 about the breakdwon of the Soviet Union or the changes in the Balkans or the Reunification of Germany ever be taken serious, only for a second? No! But world events sometimes tend to unfold very quick, in a scale and direction no one in his right mind would consider worthy taken into account seriously before they occur …

@Terp: In a morbidly curious way I’m sort-of pleased to see that German politics has descended into a very similar state of corruption and shambles as we have in Britain. This aspect of German politics doesn’t get covered in UK MSM. It’s equally good to know that growing numbers of German people are aware of it and waking up.

@John Dixon: Most people here would agree with the bottomless commitment Merkozy have to preserving the EZ. But read the FT blog link posted by @DT above; it suggests that the IMF is getting twitchy feet about Greece…

Cheerful chappie, aren’t you. Nothing like a dose of mittel-Europa angst to brighten future prospects. Wonder where, in all your ‘years of reading and research’, you got little gems like this:’ Prague is destroyed by an asteroid (?)..’

At least that one gave you a moment’s evident pause.

By the way, what possible interest could Russia have in trying to invade Europe? One would think that the Russia you envisage is exactly the same as the old USSR at the height of the Cold War, with the same outlook, the same relative strength vis-a-vis military capabilities, and with the same invasion forces on a state of permanent readiness. Despite Putin’s posturing and machinations, things have changed somewhat since those days. I would suggest that the last thing Putin wants is a military conflict with the West. It makes no sense politically or militarily for him or those with whom he shares power.

It’s all very well, but what this piece doesn’t take into account are the simple and very evident facts that Lagarde, Merkel and Sarkozy are completely committed to preserving the Eurozone virgo intacta, and that Sarkozy announced only days ago that the problem of Greece was now over. For all the previous bluff about being prepared to let Greece go, in reality this is a step that Lagarde and Merkozy cannot contemplate, and will
go to any lengths to avoid. The only possible change to this reality will come if either half of Merkozy loses office.

@BT : That is because the vast majority of germans are clueless idiots.
The polls also showed 45% in favor of Mr. Wulff being president while only 15% thought he was an honest person (same poll!), go figure…

@ Dan : Sadly there is no real alternative to Mutti Merkel, we´ll either end up with the clueless Socialists and Greens or with another dumbass big coalition.
I would strongly advise everybody to stop engaging in bullshit elections while at the same time heckle the f*ck out of every politician you see on the street.

Well, I think we understand that’s all Germany wants-but the world and people just don’t work like that. There are more problems caused by trying to make the world accord with various ideas as to “how it should be” than anything else. Understanding this does not make us “little Englanders”-just realists.

Pessimism is not at all my cup of tea. Merely watching events unfold in a relaxed way and getting to sane conclusions for some basic preparation as far as possible without developing hysteria in constant fear for doomsday.

Important: a large stockpile of decent tea, sugar, long-term-tenable milk, a posh sterling tea set to enjoy until it needs to be sold for survival and a spare china one to get over the loss of the sterling.

I do get rather bored with the line that ‘Germany wants to take over Europe’ which raises its head with monotonous regularity. Anyone who knows Germany and the Germans will also know it simply isn’t true. There are as many swivel-eyed nationalists in Germany as there are in every other European country just as there are as many three-legged dogs in Germany as there are in every other European country, Back in the real world all the Germans want is an orderly world in which everything, including trade and commerce runs smoothly, so that they can knock off on time to go home and relax with a beer or a glass of Riesling. That’s it. It’s not an explanation which will suit the little Englanders who read The Slog, but it’s rather closer to the truth than they care to admit.

One point to bear in mind here is that German politics is very likely not as monolithic as you all seem to be thinking. A while ago I saw what was effectively a biography of Merkel (maybe on this very blog), and what struck me about her was this: she exactly fits the profile for a high-functioning psychopathic personality. Moreover she seems to operate by acting to maintain her personal power at every point and only seems to look a few months into the future, sometimes not even that.

The usual downfall of a high-functioning psychopath is when they accumulate enough enemies who know them, don’t trust them and either fear or hate them enough to want rid of them regardless of personal cost. I rather think that this moment passed quite a long while ago for Merkel. Recent events in German politics are telling: the new president is the man who oversaw the investigation into the East German Stasi; if anyone knows where the bodies are buried it is he. Merkel came originally from East Germany, where she was VERY active in their politics and given the unremitting murkiness of that hole of a country, she would undoubtedly have been caught up in Stasi evil-doings.

Whoever is engineering this is playing a long game. The former president’s dodgy dealings would have been known of for a long time, but the engineer here waited and waited until the new president was poised just so, then dropped the out-going one right in it; this was a set-up of masterly intent. Merkel didn’t spot it coming, though she tried to get shut of the new president who she clearly fears.

In Germany, someone is working towards a coup to kill Merkel’s political career once and for all. It would appear she now has enough political enemies that they simply want her out of their way altogether. Doing this won’t be popular, but right now the EU isn’t very popular in Germany either. The poor old Greeks are going to be used as the excuse for Germany to exit from the EU kleptocracy (might the plot go back so far as to when Greece was allowed in on the nod, to deliberately set this situation up?), at which point the Euro is going to go into free fall as it won’t have German backing any more; Germany is the sole thing keeping the Euro strong right now.

Anything is possible, but the drivers behind fixing the Iran problem are mainly Israel and the US. But neither are members of the EU, despite having substantial power and influence within it. And I don’t think Nato could get involved without a UN Resolution, which it’s unlikely to get.

Regarding prophecies there are several ones in Germany also, who might have guessed. There is also a vital community researching into prophecies here.

These are the stages of the prophecised drama unfolding:

1. In late spring early summer of year X Europe is inmidst the worst economic crisis since the great depression of the 1930s. Reality exposes the lies of the politicians The latter are considered traitors and crooks.
2. Inmidst all that comes the start of a new war in the near and middle east, threathening to set the whole region on fire. Talks on peace are starting, a few weeks of negotiations.
3. Meanwhile in some states in Europe discontent amongst the people grows into open turmoil. Joblessness ruining social systems, resulting in some drastically exceeding taxation.
4. In Italy civil-war-like circumstances are unfolding, Rome burns, Priests are murdererd, blood knee-deep in the streets, the Pope has to flee the city to the north and in the end strands in Cologne. France falls, Paris is burned to the ground by civil war.
5.Whilst Italy is still getting worse, new fighting starts on the Balkans.
6. Immediatley after that russian troops advance to Serbia.
7. Russian troops invade Germany overnight.
8. Thus the “Third World War” begins. People are in utter disbelief.
9. The german army has no means to stop the invasion, russian troops are heading througfh Germany and are then stopped/are halting at the Rhine.
10. Western forces lay a “yellow straight band from Prague to the northern city in the bay” (Stettin/Szczecin?) thus averting ground manoeuvers and troop supply for the russians.
11. The russian troops are trapped and a final battle is fought in Westphalia and the larger Cologne and Ruhr area.
12. Some enormously huge bomb (atomic? hydrogen?) is used by the russians in the north sea somewhere between Scotland, Iceland and Norway where the North Sea gets into the Atlantic Ocean (to destroy British and American ships operating there?). London and southwestern England are flooded completely, Scotland and Norway terribly struck by huge floods, Denmark, the plains of northern Germany and the Netherlands overflooded as well.
13. A bright shining heavenly object appears over embattled Europe, for a time outshining even the sun. When this object disappears a dark cloud emerges, debris falling down from it, the air is filled with dust, and who inhales that dust is dying after a few breaths. In closed rooms one can survive. Not the air is lethal, but the dust in it. Prague is destroyed by an asteroid (?), Water flooding up the Rine valley destroying everything up to the Palatinate, Berlin is undestroyed, but completely empty of people.
14. Three days darkness all over the planet. In that time one third of the worlds population dies. Extreme earthquakes, large areas of land sink and others rise, gigantic tsunamis/tidal waves, monstrous storms.
15. After the three days darkness there is havoc and disarray everywhere. In Central Europe some state/gouvernment structures still exist and thus the worst aftermath of the catastrophy is over after a few months. Technical regression due to circumstances are considered as beneficial for society soon.
16. Europe finds itself in a completely cahnged geostrategically environment. The hawkish forces in Russia are gone, the country later on becomes a reliable partner. The USA are weakend substantially due to catastrophy and disaster in their homeland and loose all influence in Europe and the world. The Dollar has gone as has the US-dominated financial world. Europe manages to become a peace power in the middle east and is able to help create stability there. Capitalism is utterly reformed/transformed and is bound by strong and strict laws to prevent economical circles from destroying nations ever again. Money has lost its former status. Spirituality is growing among people. A modern kind of parliamentary monarchy is regarded the best gouverning system in many nations.

That is mainly the summary of what i have learned after years of reading and research. It would be interesting to know the prophecies of other countries, too, and put them all in context to each other.

Knowing all this it is interesting to watch the current drama unfold in a dauntingly similar way to what the prophecies tell …

SoFFin was set up to supply liquidity and stability to the German banking system and, critically, for a real estate group called HYPO REAL ESTATE and most funding apparently went to COMMERZBANK AG. SoFFin still has guarantees in force out to 9/10/2012 and may add more.

It’s happening as we speak. The forces of darkness are everywhere, all the time. I used to laugh in the 1990s when the internet evangelists used to say they were stronger than govts. I knew it was just a matter of time before they got back in control.

I’m worried your perceptive take on all this will be used as an excuse for controlling the Internet. Those scheming bastards must hate the way their machinations are revealed and would like to silence you.

The prophecies here in Greece from some monks in Mount Athos say that this will happen, and the international capital will depart from Greece. The country will starve for 1.5 year but this will happen after a “political anomaly”. I believe the next period when we can have a political anomaly is the April 29 elections, where I do not believe many of the voters here are prepared to vote for one of the three parties (Pasok, ND and Laos) who brought us here and have signed the demands of the troika.
However – according to the prophecies – this will trigger the beginning of World War III, a war that will end with 700 million deaths (Europe has 500 million if I am not wrong).

I think the UK (all current parts) are a better fit with the other badly-managed countries of Europe. Something like ‘SPIGUK’ comes to mind. We would find it very difficult to perpetrate our ‘overspend then devalue’ model in the company of Germany.

From my experience in Spain, there is a certain desperation to their determination not to leave the EZ at any cost. It has to do with (a) loss of prestige membership of the ‘elite club’ and (b) loss of very juicy and apparently never-ending EU subsidies (nearly €200bn to date and counting). Of course the EU and the EZ are not the same thing, but apparently the distinction is not important. So at least for Spain, resignation and a quiet slink into the night are not an option. Yet.

My feeling at present is that the 23rd will come and go without a ripple. However if it really is a case of Germany or Greece then the practicalities need to be considered. If Greece leaves you can be sure it will be very messy indeed – financial and political repercussions on a global scale – and no one will be driving events. If Germany leaves it will still be messy but Germany can control the timing (it will be sudden – no warning), have the initiative and to an extent control events. A much better prospect. So if it doesn’t look like Greece will go then Germany will in my view put into place a contingency plan. The timing of all this remains a mystery to me.

@Jim. That’s what I’ve been wondering. In what way would these economically C-list countries enhance the Eurozone? What would they bring to the table? Why on earth would they want to join a”union” displaying so much conflict and disunity?

Strictly from an economics point of view, the numbers don’t work out. Greece should default back in May 2010, and return to the Drachma. Devalue, pick-up its piece s and move on. Today Greece would be back on growth.

But, the euro is also a political project too. If this is not an intermediate step toward a political and fiscal Eurozone union then Greece will be totally destroyed….

Absolutely Nothing. One only needs to look at the pipeline of countries lined up for Enlargement to recognise that none of them have two beans to rub together (and not most harmonious populations either) and if it wasn’t for EU Structural Funding and the promise of visa free travel none of them would be interested.

What is the reason for your confidence? Greece is in an impossible situation and is very likely to be sacrificed one way or the other. The economy is in a atrocious state and the numbers are only getting worse. The political class is broken and led by a Goldman acolyte who is batting for the banks and any change will only be a lurch to the socialist left. They’ll be useless because they wont have anyone else’s money to spend.

There is no competitiveness in the Greek economy and there never was anyway. It’s not like a manufacturing powerhouse is going to spring up in 6 months.

I don’t want to write Greece off, however the best chance they have of survival lies outside the Euro (after some serious initial pain).

I’m all for optimism but as it stands Greece is facing the abyss. It is unfair that the rest of Europe is nudging them into it as a guinea pig to give them an idea of what not to do once contagion spreads.

In the UK this week there will be a major distraction from all this – the Budget on Wednesday where Ozborn will have to gass-bag for an hour in the commons followed by the MSM’s dissecting it later on Weds and into Thursday .All other news will go unreported as usual .

Leave your pessimism on your doorstep: Greece (and Europe) will make it, despite the odds you present. It’s an important milestone for further European integration and Papademos is right: the vicious circle will soon brake, uncertainty will ease and Greece will be more stable, less corrupt and sustainably competitive. Don’t write us off so easily!

as you mention in your article, the Germans do not do things without having considered the situation as best they can. Whatever hopes they may have, the reality is often very different when it happens. Preparedness is better than nothing in any situation. It is something that the British government could do with learning.

If the continuous pro-EU lip-service given by our politicians serves any purpose, than its diverting the focus from a possible german “step of last resort” aka “Screw you guys, I´m going home!”.

The conspiracy rumors about Germany dumping the EUR and falling back on its own currency void of economical basket-cases are as old as the recent financial crisis (the first “whistleblower” thread I remember was from 2009 I think) and have been popping up regularly ever since. I never gave those rumors much credit back then, but by now I won´t be suprised if they whip out fresh new Draghi-free currency at the turn of a switch…

Sid
I’m inclined to agree. Keiser has always believed they’d go back to the Mark, but that would be desperation stuff. I suspect Berlin’s main hope is that the ClubMeds kind of harmlessly resign.
The problem is, that’s not going to happen.

The credibility of the german political class is effectively zero.
The only reason the contempt for it, coupled with the resentment for the centralist EU insanity, hasn´t breached containment yet is the still flowing government cheese.
Try to implement only 1/10th of the troika-esque austerity and fiskal responsibility in Germany and watch the plebes set the house on fire, with all the EUfriends in it.

For Germany to leave would make problems for the EU, but it would be a move by Germany in a position of strength.

A Greek exit would be from a point of view of weakness.

A German exit would be easier to manage, and politically sensible. I wonder if the chatter in the MSM is building up the German electorate to accept this. Remember also that the MSM in Germany is not always a German voice as VJ has given evidence to suggest.

My hope is that Merkel has the guts to take this on. Had this happened in 2010 the situation now would be very different, but were the German banks ready to take a hit of the kind that you describe?

A further point is are the British banks ready for such a hit? It might not be a large hit, but it could be enough given their weakness*. The danger is in not knowing, and this is what the German have prepared for. I hope the British have been as careful.

[*RBS is trading at around 20-30p Commerzbank trades at around €1,10-€1,30 – not that share price is much to go on! But it shows a relative weakness if nothing else between two banks badly affected by the 2008 crash].

A German plan B, that makes sense to me, Merkel has just been to China, might not have been partly to improve relations with them in order to increase exports ? Germany could also possibly set up a Northern European & Scandinavian trade bloc, maybe bonnie Scotland could later join it or even the UK, if there is anything left of it by then, as described in john’s previous post.

I have watched or more accurately listened to, probably hundreds of WW2 documentaries on the History channel etc over the last few years, whilst working as a freelancer at home. One of the things that struck me about the Germans throughout the war was how firstly, they were very efficiently led ( by their generals, not Hitler ) & always managed to withdrawal with a sting in their tail. Even after Stalingrad they managed it. The battle of the Bulge signalled the end for them, in as much as it was all or nothing & they had nothing left to give.

I think when it comes to damage limitation the Germans are capable of coming out of this mess in a much better state than the rest of us.

If any mainstream German political party were to try to reverse course now, all their credibility would be shot.

Yet put the penny on its face, and you have a different situation. German politics has lost credibility because it has lost its course. If it were to change course (= reverse course) it would then be in common with what a lot of Germans now think. That would not shoot their credibility, but restore it.

Yeah … I’d put the possible sequence as: Greece, Portugal, Spain, Italy. Timing is impossible to speculate on given the can-kicking going on. As is the cost to EZ taxpayers of bailouts, support funds, junk bond write-offs, LTROs and all the rest of it.

Germany doing an about-face on the Euro this late in the game, after so much political capital has already been spent and more and more continues to be spent is unthinkable, especially as every mainstream German politician is emphatically pro-EZ.

German voters have their choice between EuroFanatics, EuroExtremists, EuroManiacs and EuroFiends.

If any mainstream German political party were to try to reverse course now, all their credibility would be shot. By extension, the credibility of the German political class would implode. (This is the same reason why no Catholic Pope can turn his back on unpopular Catholic dogmas such as clerical celibacy, or no mainstream US or UK politician can admit that the War on Drugs is not working.)

I’m not sure JW is right about how things will pan out. There is the French election, and then the US election-I can see the can being kicked down the road until after these, at the very earliest. There is a point where economics trumps politics-but I don’t think we’re there yet.

Wow! Now this is what I call journalism. I wonder if we’ll see it ever again in the mainstream media?

Whether the Greek plug is pulled this week, Easter week or some other week in the near future is hard to predict, of course. But once it is, then what will happen? Will it be just another one of these carefully contrived non-events, where it goes by not with a bang, nor even a whimper, but rather a shrug and back to business as usual (except for the Greeks)? The normalcy bias is one of the strongest forces on the planet, and it would take something very substantial to break it. Can they let a small shard of the can fall by the wayside, and continue kicking the rest of it?

Greece should never have joined the cursed Euro in the first place, and nor should all the other PIIGS. Greece is between a rock and a hard place. Unless she leaves the Euro Greece will end up with very little of her economy left, but if she does leave she may find it difficult paying for food and fuel. As to Germany leaving the Euro that is the favoured solution of a stockbroker friend, but I doubt that will happen. After all as the late Nicholas Ridley remarked monetary union was merely a ‘German racket to take over Europe’. And so it has proved to be.